Hayek on deficits and the Reagan tax cuts

“On the scale on which [tax cutting] is being tried, I’m a little apprehensive. I’m all for reduction of government expenditures but to anticipate it by reducing the rate of taxation before you have reduced expenditure is a very risky thing to do.”

“The only way you can finance deficits is by inflation. You cannot raise this amount of money by genuine borrowing. You borrow from banks, which create credit for the purpose. A large government deficit is a certain way to inflation.”